Correlation Between Mesa Air and Eltek

Can any of the company-specific risk be diversified away by investing in both Mesa Air and Eltek at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Mesa Air and Eltek into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mesa Air Group and Eltek, you can compare the effects of market volatilities on Mesa Air and Eltek and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Mesa Air with a short position of Eltek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesa Air and Eltek.

Diversification Opportunities for Mesa Air and Eltek

-0.12

Correlation Coefficient

Mesa Air  Eltek

Good diversification

The 3 months correlation between Mesa and Eltek is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Air Group and Eltek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eltek and Mesa Air is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Mesa Air Group are associated (or correlated) with Eltek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eltek has no effect on the direction of Mesa Air i.e., Mesa Air and Eltek go up and down completely randomly.

Pair Corralation between Mesa Air and Eltek

Given the investment horizon of 90 days Mesa Air Group is expected to generate 1.69 times more return on investment than Eltek. However, Mesa Air is 1.69 times more volatile than Eltek. It trades about 0.16 of its potential returns per unit of risk. Eltek is currently generating about 0.01 per unit of risk. If you would invest  100.00  in Mesa Air Group on October 5, 2024 and sell it today you would earn a total of  16.00  from holding Mesa Air Group or generate 16.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Mesa Air Group  vs.  Eltek

Mesa Air Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mesa Air Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Mesa Air is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Eltek

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eltek are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Eltek may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Mesa Air and Eltek

The main advantage of trading using opposite Mesa Air and Eltek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesa Air position performs unexpectedly, Eltek can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Eltek will offset losses from the drop in Eltek's long position.

The idea behind Mesa Air Group and Eltek pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.